21st Feb 2024


Talking about monetary union and Cyprus this WEEK

  • In Brussels on Monday to make the case for defence spending (Photo: Nato)

Senior EU politicians will gather for a conference in Brussels Tuesday on how to reach economic and monetary union (EMU) amid strong divisions between member states about the speed and order of the successive steps.

The meeting, attended by the head of the European Commission, the head of the European Parliament's economic affairs committee and the head of the Eurogroup, is to discuss how to reach "genuine" EMU.

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Most EU talk on the matter is agreed that there needs to a banking union, more transfer of budgetary power to Brussels as well as solidarity mechanisms to help ailing states. Another key issue is how to make the transition and the final result happen in a way that EU citizens are aware of the process and approve of it.

At government level, the process is split between those member states - such as France - who want to see more solidarity before they undertake further structural reforms. On the other side is Germany - largely responsible for the pace of progress - who wants to see countries get their budgets in order before it will commit to solidarity measures.

The other major talking point this week will be recently bailed-out Cyprus. Its bailout package, requiring deep budget cuts as well as tax hikes, will be discussed by eurogroup chief Jeroen Dijsselbloem on Tuesday in the European Parliament and a day later by economic affairs commissioner Olli Rehn and European Central Bank member Joerg Asmussen.

Under the terms of Cyprus' bank bailout, shareholders, bond holders and uninsured deposit-holders are facing substantial losses, a key demand of Germany. Dijsselbloem has also indicated this will be the template for future bank bailouts.

Nato chief Anders Fogh Rasmussen will kick off the week by appearing before the parliament's foreign affairs committee to discuss the future of EU defence. In recent weeks, he has been urging member states not to cut their defence budgets, even in times of economic crisis. He points out that lowering defence spending would lessen European states' ability to work along side the US on defence missions and risked undermining Washington's support for the military alliance.

Appearing in front of the committee directly after Rasmussen will be Italian defence chief Mario Mauro. He is to give his thoughts on what Italy expects from the high level EU defence summit planned for December.

On Wednesday the European Commission will unveil 12 new measures to improve the rights of citizens in the EU as well as a directive on improving transparency in bank charges.

Meanwhile Bulgaria will wrap up the week with parliamentary elections. The Sunday (12 May) poll is expected to return the centre-right Gerb to power, despite its resignation from government earlier this spring amid mass protests by Bulgarians over poor living standards.

A recent survey gave Gerb 23.6 percent of the vote and the Socialists at 17.7 percent. Bulgaria is the EU's poorest country and its disaffected citizens have been taking to the streets in anger over corruption, the unemployment rate and high utility bills.

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